Correlation Between AmTrust Financial and Arrow Financial
Can any of the company-specific risk be diversified away by investing in both AmTrust Financial and Arrow Financial at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining AmTrust Financial and Arrow Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AmTrust Financial Services and Arrow Financial, you can compare the effects of market volatilities on AmTrust Financial and Arrow Financial and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in AmTrust Financial with a short position of Arrow Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of AmTrust Financial and Arrow Financial.
Diversification Opportunities for AmTrust Financial and Arrow Financial
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between AmTrust and Arrow is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding AmTrust Financial Services and Arrow Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arrow Financial and AmTrust Financial is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on AmTrust Financial Services are associated (or correlated) with Arrow Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arrow Financial has no effect on the direction of AmTrust Financial i.e., AmTrust Financial and Arrow Financial go up and down completely randomly.
Pair Corralation between AmTrust Financial and Arrow Financial
Assuming the 90 days horizon AmTrust Financial is expected to generate 3.22 times less return on investment than Arrow Financial. But when comparing it to its historical volatility, AmTrust Financial Services is 3.07 times less risky than Arrow Financial. It trades about 0.19 of its potential returns per unit of risk. Arrow Financial is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 2,921 in Arrow Financial on August 28, 2024 and sell it today you would earn a total of 414.00 from holding Arrow Financial or generate 14.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AmTrust Financial Services vs. Arrow Financial
Performance |
| Timeline |
| AmTrust Financial |
| Arrow Financial |
AmTrust Financial and Arrow Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AmTrust Financial and Arrow Financial
The main advantage of trading using opposite AmTrust Financial and Arrow Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AmTrust Financial position performs unexpectedly, Arrow Financial can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Arrow Financial will offset losses from the drop in Arrow Financial's long position.| AmTrust Financial vs. AmTrust Financial Services | AmTrust Financial vs. AmTrust Financial Services | AmTrust Financial vs. AmTrust Financial Services | AmTrust Financial vs. AmTrust Financial Services |
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Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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